Oil Prices Lag Behind Middle East Crisis

Analysts warn that oil futures prices are not reflecting the real-world disruptions in the Middle East, with some physical crude prices potentially reaching $150 per barrel. Amrita Sen, founder of Energy Aspects, highlighted that the market is overly focused on U.S. mid-term elections and underestimating the impact of ongoing hostilities. The current pricing seems disconnected from the actual infrastructure damage and shipping disruptions in the region, according to Sen. The crisis has also triggered an unprecedented shipping bottleneck, with tankers stuck in ship-to-ship transfers near the Strait of Hormuz. This has led to record-high freight rates and a shortage of available vessels for other routes. Russell Hardy of Vitol described the shuttle-shipping process as highly inefficient, noting that increased oil production from the Middle East is now causing a shipping crisis. Despite the rising tensions, Brent crude remained above $100 a barrel in Asian trade, showing a weekly gain. However, the surge in attacks on tankers in the Strait of Hormuz threatens to halt any potential rebound in Middle East oil supply.